Correlation Between Alcoa Corp and NuGene International
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and NuGene International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alcoa Corp and NuGene International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and NuGene International, you can compare the effects of market volatilities on Alcoa Corp and NuGene International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alcoa Corp with a short position of NuGene International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and NuGene International.
Diversification Opportunities for Alcoa Corp and NuGene International
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and NuGene is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and NuGene International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuGene International and Alcoa Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alcoa Corp are associated (or correlated) with NuGene International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuGene International has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and NuGene International go up and down completely randomly.
Pair Corralation between Alcoa Corp and NuGene International
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 0.2 times more return on investment than NuGene International. However, Alcoa Corp is 5.08 times less risky than NuGene International. It trades about 0.22 of its potential returns per unit of risk. NuGene International is currently generating about 0.02 per unit of risk. If you would invest 4,131 in Alcoa Corp on August 28, 2024 and sell it today you would earn a total of 591.00 from holding Alcoa Corp or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alcoa Corp vs. NuGene International
Performance |
| Timeline |
| Alcoa Corp |
| NuGene International |
Alcoa Corp and NuGene International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and NuGene International
The main advantage of trading using opposite Alcoa Corp and NuGene International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, NuGene International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NuGene International will offset losses from the drop in NuGene International's long position.The idea behind Alcoa Corp and NuGene International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NuGene International vs. Absolute Health and | NuGene International vs. China Health Management | NuGene International vs. Embrace Change Acquisition | NuGene International vs. TransAKT |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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